2025
Markets and Prices
Name: Markets and Prices
Code: GES12561D
6 ECTS
Duration: 15 weeks/156 hours
Scientific Area:
Management
Teaching languages: Portuguese
Languages of tutoring support: Portuguese
Sustainable Development Goals
Learning Goals
The purpose of this course is to provide students with the tools and analytical techniques necessary to study imperfect competition markets (monopoly and oligopoly). In particular, the students should know and be able to show the results of various models:
• Monopoly with price discrimination
• Monopoly with quality and advertising decisions
• Oligopoly with and without product differentiation
• Switching costs
• Collusion models
• Strategic decisions to influence the entry or exit of other firms
The emphasis in this course is on the theoretical modeling of imperfect competition markets, with the aim of developing the ability to make formal reasoning and the analytical skills of the students.
• Monopoly with price discrimination
• Monopoly with quality and advertising decisions
• Oligopoly with and without product differentiation
• Switching costs
• Collusion models
• Strategic decisions to influence the entry or exit of other firms
The emphasis in this course is on the theoretical modeling of imperfect competition markets, with the aim of developing the ability to make formal reasoning and the analytical skills of the students.
Contents
1. Markets and Market Structure
Revision of the perfect competition and monopoly models
Monopolistic Competition
Market definition and concentration measures
2. Topics on Monopoly theory
Price discrimination
Multiproduct monopoly
Quality and Advertising
3. Oligopoly Models
Cournot Model
Bertrand Model
Stackelberg Model
Solutions to Bertrand paradox
Price competition with capacity constraints
4. Product Differentiation
Horizontal differentiation models
Vertical differentiation models
Switching costs and imperfect information
Advertising
5. Repeated Interaction and Colusion
Non sustainability of collusion in the short-run
Conditions for collusion to be sustainable
Collusion with demand fluctuations
Collusion with non-observable prices
6. Strategic behaviour, entry, exit and acommodation
Blocked entry, detered entry and acommodated entry
Taxonomy of firm strategies
Strategic behaviour and incomplete information
Revision of the perfect competition and monopoly models
Monopolistic Competition
Market definition and concentration measures
2. Topics on Monopoly theory
Price discrimination
Multiproduct monopoly
Quality and Advertising
3. Oligopoly Models
Cournot Model
Bertrand Model
Stackelberg Model
Solutions to Bertrand paradox
Price competition with capacity constraints
4. Product Differentiation
Horizontal differentiation models
Vertical differentiation models
Switching costs and imperfect information
Advertising
5. Repeated Interaction and Colusion
Non sustainability of collusion in the short-run
Conditions for collusion to be sustainable
Collusion with demand fluctuations
Collusion with non-observable prices
6. Strategic behaviour, entry, exit and acommodation
Blocked entry, detered entry and acommodated entry
Taxonomy of firm strategies
Strategic behaviour and incomplete information
Teaching Methods
The classes combine the teaching of concepts with their application to particular examples. PowerPoint presentations are used in combination with blackboard (blackboard is used often, namely to show theoretical results and to solve exercises).
Students have to do three group projects, where they have to apply the tools and techniques learned in class. Two of these group projects involve solving exercises, many of which are new applications or generalizations of the models learned in class. In another group project, the students are encouraged to review few empirical papers on a topic, to complement what they learn in class.
The evaluation in this course is based on the results of two practical group (20%), asummary of a scientific article or a chapter of the Handbook of IndustrialOrganization (20%) and a final exam (60%). The minimum grade on the exam is 7.5
Students have to do three group projects, where they have to apply the tools and techniques learned in class. Two of these group projects involve solving exercises, many of which are new applications or generalizations of the models learned in class. In another group project, the students are encouraged to review few empirical papers on a topic, to complement what they learn in class.
The evaluation in this course is based on the results of two practical group (20%), asummary of a scientific article or a chapter of the Handbook of IndustrialOrganization (20%) and a final exam (60%). The minimum grade on the exam is 7.5
Accreditations and Certifications
